Stephanie Li earned her MFA in creative writing in fiction from Cornell University in 2004 and completed her Ph.D. there in 2005. Prior to coming to IU, she held faculty positions in the English Department at the University of Rochester.

Li's research is united by a commitment to bridging the divide between political rhetoric and literary narratives. Whether analyzing differing conceptions of freedom in 19th-century slave narratives or parsing the racial subtext of contemporary political rhetoric, she emphasizes how personal and social resistance is vital to African American discourse. Her extensive writing on Toni Morrison, including a short biography published in 2009, has also been foundational to elucidating the contradictions and doubled aims of American racial representation.

Li's first monograph, "Something Akin to Freedom: The Choice of Bondage in Narratives by African American Women," analyzes literary examples in which African American women decide either to remain within or enter into conditions of bondage. In her 2011 book, "Signifying without Specifying: Racial Discourse in the Age of Obama," Li describes a new mode of racial discourse for the 21st century, what Toni Morrison calls "race-specific, race-free language." She proposes that Morrison's conception of language that encodes race without racism requires new levels of intimacy even as it reifies other forms of difference. In such texts as Morrison's Paradise, Colson Whitehead's Apex Hides the Hurt, the short stories of Jhumpa Lahiri and the writings and speeches of President Obama, she demonstrates how race now functions through a type of interpretative understanding, rather than as an avowed category of identity.

Li continued with this focus on race in her 2015 book "Playing in the White: Black Writers, White Subject." In it, Li considers how postwar African American authors represent whiteness. Her interest in representations of whiteness extends to 21st century novels by American writers of various backgrounds.